I was happy to see that the Obama Administration has sent a letter to the Chairman of the House Financial Services Committee opposing the inclusion of wind coverage in the National Flood Insurance Program. There was recognition for the need for the rates charged for the coverage to be “actuarially sound.” When this was factored into whether there was a need for a federal program, the determination was that there were sufficient private market resources available to provide the coverage.

As I’ve said before, what will help to keep the catastrophe rates down, is if the tax code is changed to allow for the deductibility of reserves established for future catastrophes. Before my friends in the reinsurance world get all excited that I am advocating a reduction in rates, please note that, at present, any premiums (less expenses) that are not used to pay current year catastrophes are considered to be profit and subject to corporate income tax.